Selecting a mortgage for your home could be the most important financial decision you will make. It’s a loan that will take years to pay off, and every small detail can make a difference in how much you are required to pay every month.
Mortgage lender compete for your business, so it is in your benefit to negotiate. Look around for the best deal and make sure you let them know that. This is one of those cases when knowledge can be to your benefit.
You are dealing with your money, so it’s worth putting in a little extra effort. Rarely are rates and terms engraved in stone in the negotiating stage. Even a quarter point better interest rate obtained can save you hundreds or even thousands of dollars in the long term.
Your credit report is the place to start, and you should make sure there are no errors. There are three basic credit report companies and you should check them all. It is believed that up to 50% of all credit reports contain some errors. If the errors are not corrected, you can pay more money or even not qualify for you loan.
Learn about different types of loans. Loans usually fall into one of two categories: government and conventional. Any mortgage other than FHA, VA or RHS (Rural Housing Service) is conventional. You should know what type of loan is best for you.
Mortgage rates fluctuate. Keep track of these rates by watching the Treasury Market and the overall market trends. Do your homework and compare rates different lenders make available. But, make sure you don’t overlook fees and points. Lenders can waive certain fees but be careful they don’t waive one and tack on another.
Make sure you ask yourself some questions before you set an appointment with a lender. Be clear on how long you plan on being in your home, if you estimate your job to continue with no foreseeable problem, and what type of payment you would be comfortable with. Find out if the loan is assumable. This could be very important if you plan a move early on.
If you are okay with paying a fee for this, a broker can find you a lender. Remember, he’s not obligated to find you the best deal, just a lender. If you can find a lender, then it is up to you to negotiate the deal. Inquire about the amount the broker is expecting from you, so that you won’t have to run into unexpected expenses later on.
When you think you have a good deal, ask the lender to obtain a written lock-in. This will ensure that if the interest rate goes up while your loan is being processed, you will not be affected. If interest rates fall during the process this could work against you but most lenders will work with you if this happens.
There is some work that must be undertaken, but it will save you money and it is worth your effort. The better credit risk you are and the more they think you know the more willing lenders are to compete for your business. And, no doubt, you will be the winner in the competition.
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